we can do it Some Oklahoma lawmakers are pushing unnecessary legislation to promote equal pay for equal work—as though women don’t already receive it. Proposals like this enable politicians to amass more power and regulatory authority for themselves. But as OCPA’s Tina Korbe Dzurisin points out, the generalized pay gap between men and women actually serves to remind us that women can think and act for themselves.
In Case You Missed It Economist Byron Schlomach says Oklahoma’s state and local governments take more from the state’s economy than Massachusetts.
OCPA distinguished fellow Andrew Spiropoulos reminds us that we live in a country where Supreme Court justices simply impose their policy preferences on the rest of us.
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When it comes to examining the naked self-interest of David Boren and the “teacher caucus,” OCPA president Jonathan Small wants to know where all the journalistic watchdogs have gone.
Dave Bond, the CEO of OCPA Impact, says that after $230 million in new taxes and fees were enacted this legislative session, it’s time for further progrowth income-tax cuts.
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OCPA distinguished fellow Andrew Spiropoulos says people get angry when “political insiders, lacking extraordinary accomplishments or expertise outside of politics, parlay their connections into a high-paying job” in higher education. bit.ly/2a9GVb9
In a world where Yelp and Uber and the like are providing true accountability, OCPA intern Curtis Shelton says so-called accountability to politicians and bureaucrats makes less sense.
In a new report, OCPA distinguished fellow Jayson Lusk examines the evolution of American agriculture and the changing role of the USDA.
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PERSPECTIVE
The state’s largest newspaper reported on some ideas for lowcost, high-quality college.
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A supporter of the Boren tax increase says she can’t afford private school for her children.
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Brandon Dutcher, Editor Alex Jones , Art Director
OCPA Trustees
OCPA Researchers
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Sales Tax for Education Would Generate Millions
If policymakers want to disincentivize government spending, level the playing field for Oklahoma businesses, and help fill the 2017 state budget gap, they should force educational institutions to pay sales tax on their purchases.
By Steve Anderson
University of Oklahoma president David Boren is leading the charge for a 22 percent increase in the state sales tax rate. But of course such a tax hike would have many harmful effects. “A decrease in competiveness could discourage long-term growth and disincentivize relocation to Oklahoma,” writes Erica Wilt of the Tax Foundation. “It would likewise impact individual pocketbooks, placing the highest burden on those with lower incomes and possibly leading consumers to purchase less, engage in cross-border shopping, or buy online. Furthermore, counties, cities, and towns in Oklahoma rely on local sales tax revenue to pay for essential services. A higher state rate could provide them with less flexibility on local rates.” What’s interesting is that Mr. Boren wants to raise a tax that educational institutions—both in higher education and in common education—do not pay. When I was budget director for the State of Kansas, we floated the idea of making the state government—including educational entities—pay sales tax on their purchases. This was after we discovered that the amount of lost revenue to the state was approaching $650 million (including about $8 million in state sales tax charges to the federal government they would not have been able to collect unless the state also paid sales taxes). The hue and cry from the education establishment was immediate. It consisted largely of complaints that it would make things more expensive for them. Well, yes. As conservatives, we believe that disincentivizing government spending is a good thing, not a bad thing. Consider, for example, the never-ending building spree in higher education. Rick Green, reporting on the latest example July 13 in The Oklahoman, writes: “The major new construction comes at a time of increasing student costs, a state recession caused by the oil industry downturn, and a state revenue shortage that has cut funding to most state agencies.” Are all these new projects necessary? “Anyone that has driven through a college campus in Oklahoma in the last 10 years has seen a tremendous growth in construction projects, whether at the University of Oklahoma, Oklahoma State University, or smaller institutions,” state Sen. Patrick Anderson (R-Enid) was
quoted as saying. Although some of the spending is necessary, Anderson says, higher education officials have used the “Master Lease Program” to purchase “scoreboards, AstroTurf, golf carts, airplanes, things that don’t seem to be the most necessary items for colleges and universities.” Sen. Anderson, who is also a banker, told The Oklahoman that fees charged to students to pay for the bonds only increase the financial burden on students. “When you see the bill, the fee costs are equal to the tuition costs,” he said. In Kansas, we discovered that state sales-tax exemptions on new buildings and other construction alone totaled nearly $170 million, the vast majority of which was in education (higher education more so than common education). I would estimate the number would be similar in Oklahoma. Clearly this is a function of the build-ever-bigger-and-fancier-structures groupthink of government, especially of the education establishment. But of course buildings come with not only operational costs such as heating and cooling, but ongoing maintenance costs and long-term replacement issues. These costs consume large annual streams of funds or create hidden costs issues in deferred maintenance. Disincentivizing these expenditures by raising the cost to the university system is a good thing—not the simple “cost increase” that education officials would have you believe. Moreover, private-sector companies pay these sales taxes. Making the government pay them would help level the playing field. In sum, if policymakers want to disincentivize government spending, level the playing field for Oklahoma businesses, and help fill next year’s budget gap, they should force educational institutions to pay sales tax on their purchases. OCPA research fellow Steve Anderson is a Certified Public Accountant with more than 30 years of experience in private practice. He has also served as budget director for the State of Kansas and as a budget analyst in the Oklahoma Office of State Finance. At one time he held 17 state teaching certifications, ranging from mathematics to physics to business.
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news flash on the equal pay front:
women think for themselves By Tina Korbe Dzurisin
Watch a video interview with Tina Dzurisin at ocpathink.org/videos.
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wo years ago this summer, I resigned my position as a director of communications to become a so-called “stay-at-home mom.” At eight months pregnant with my first baby, I knew I wanted to devote myself full-time to civilizing my children and to ordering my household. Needless to say, my new position did not come with a comparable salary. It was not the first time I voluntarily sacrificed monetary reward for the sake of my family. Earlier in my career, I gladly accepted a pay cut to work saner hours. Meanwhile, my husband, a drilling engineer, has worked steadily on a single career track. As he has acquired experience and expertise, his compensation has increased accordingly. The pay gap between my husband and me has drastically widened since we first met—and no employer discrimination has ever been at play. Yet, in any discussion of the generalized pay gap between men and women, politicians are all too happy to imply unjust discrimination is always to blame. It’s easy to see why. Posed problematically, the gender pay gap justifies any number of politically popular proposals that enable politicians to amass more power and regulatory authority for themselves. In the last legislative session, for example, a handful of Oklahoma legislators used the gender pay gap as an excuse to push a redundant bill to promote equal pay for equal work—as though women do not already receive it. At the White House United State of Women conference this spring, President Barack Obama exploited the gap to purport to explain women’s declining labor force participation, which is the lowest it’s been since 1988. The gender pay gap and the decline in women’s participation
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in the labor force are related—but the causal arrow appears to run the other way. Like me, women in general are more likely to take time out of the workforce to care for children or elderly relatives. Like my husband, men are more likely to continuously participate in the labor force. As former Wall Street Journal research analyst Liz Peek points out in The Fiscal Times, economists and feminists like to emphasize the case of the young mother who stays at home because she is not highly educated and is consequently unable to pay for daycare. Yet, as Peek also notes, many highly educated mothers opt out when they have children, too, “even though they have the skills
Formerly a think-tank scribe and a director of communications, Tina Korbe Dzurisin (pictured at left with Megyn Kelly and Democratic strategist Simon Rosenberg) is now a stay-at-home mother. “The pay gap between my husband and me has drastically widened since we first met,” she writes, “and no employer discrimination has ever been at play.”
and income necessary to hire childcare.” Between 1993 and 2006, the number of collegeeducated women in the labor pool declined by 0.1 percent per year after growing at 2.4 percent per year from 1976 to 1992—a loss of 1.6 million skilled workers, according to Peek. “For feminists, the drop-out trend undermines their argument that women—even our most accomplished and best educated—are victims of discrimination,” Peek summarizes. As American Enterprise Institute scholar Mark Perry frequently highlights, women are also more likely to work in lower-risk, but lower-paid industries like office support (72.9 percent female), education (74.1 percent female), and health care (74.2 percent female), while men are more likely to work in higher-risk, but higher-paid industries like coal mining (almost 100 percent male), firefighting (94.3 percent male), and construction (97.4 percent male). Accounting for education, choice of industry and occupation, hours worked, experience, and career interruptions reduces the difference between average male and female wages to just 5 cents on the dollar, according to Heritage Foundation researchers Rachel Greszler and James Sherk. Other factors, like the cost of fringe benefits, may account for the remaining gap, they write. As a 2009 Department of Labor study put it, “The differences in raw wages may be almost entirely the result of the individual choices being made by both male and female workers.” In other words, it’s not that women are not paid equally for equal work; more or less, we are. It’s that many women—at all levels of the socioeconomic spectrum and despite the overwhelming political pressure to think of ourselves as victims—still manage to think and act for ourselves. Instinctively, we understand ourselves as more than our material compensation; especially, we understand ourselves as women with the unique capacity to bear and birth children, with all the responsibility that that entails. In light of that capacity and responsibility, we don’t always do what materialist economics tell us we should. Then again, maybe we just have a higher understanding of those economics, one that accounts for the importance of inculcating the habits of order and industry in the next generation of workers. Far from an indication that something is wrong, the gender pay gap is an indication that something is right— that, perhaps, we still live in a free economy, after all.
equal work-related deaths for equal work Every year the National Committee on Pay Equity (NCPE) publicizes its “Equal Pay Day” to bring public attention to the gender pay gap. According to the NCPE, “Equal Pay Day” fell this year on April 12, and allegedly represents how far into 2016 women had to continue working to earn the same income that the men earned last year, supposedly for doing the same job. Inspired by Equal Pay Day, I have introduced “Equal Occupational Fatality Day” to bring public attention to the huge gender disparity in work-related deaths every year in the United States. “Equal Occupational Fatality Day” tells us how many years into the future women will be able to continue to work before they will experience the same number of occupational fatalities that occurred for men in the previous year. Based on the BLS (Bureau of Labor Statistics) data for 2014 (and assuming it will be comparable to 2015 data when it becomes available), the next “Equal Occupational Fatality Day” will occur on January 12, 2027. —American Enterprise Institute scholar Mark J. Perry
Formerly a staff writer at The Heritage Foundation, Tina Korbe Dzurisin is an OCPA research associate and a mother of two young children.
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School Choice Makes Teachers Free to Teach Our whole education system is designed to treat teachers like factory line workers, not responsible professionals. School choice breaks the government monopoly by putting parents in charge—getting politicians out of the classroom.
By Greg Forster
There has been a lot of talk lately about politicians interfering in classrooms, but this isn’t actually a new problem. Politicians have been interfering with good teaching ever since we created a government monopoly on schools—because that’s what a government monopoly does. Teachers who want to be free to teach should support school choice. It breaks the government monopoly by putting parents in charge, getting politicians out of the classroom. Parents generally respect and value teachers as responsible professionals who want to help them raise their children right. Admittedly, some parents can be difficult to deal with. But politicians have always been a much bigger problem for teachers—and, as we’ll see, it’s the politicians who put the worst parents in a position of power over schools. Our whole education system is designed to treat teachers like factory line workers, not responsible professionals. That’s because the government monopoly on schooling makes every political interest group see schools as its business. If government runs the schools, you’re not allowed to tell taxpayers and voters to butt out of the classroom—not if we’re going to have a constitutional, democratic republic where government is of, by, and for the people. Some of these interest groups are well-meaning and just want to help. Some have strong ideological commitments they want the government school monopoly to teach. And a lot of them are just greedy and don’t care about education one way or the other as long as the gravy trains run on time. But all of them want to have their fingers in the classroom, which means the whole education system runs on politics. Here are just a few of the ways that works out in practice, and how school choice would make teachers free to teach.
Accountability
This is what everyone’s talking about right now. Of course, everyone is for accountability—but a lot depends on what you mean by it. Where politicians are in charge, “accountability” means centralized systems of control. Political appointees boss schools around, rewarding and punishing them based on measurements designed and selected by the politicians, for political purposes, and whose relationship to real learning is
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often highly questionable. It’s a mistake to think that this is a new issue with the recent attempt to nationalize control over education. In 2009, Christian D’Andrea and I conducted an empirical study comparing teachers in public schools and private schools, using survey data collected by the U.S. Department of Education. We called our study “Free to Teach” because we found that in private schools, where parents are in charge, teachers had much more freedom and responsibility in the classroom, and were therefore much happier with their working conditions and careers. On accountability, we found private school teachers were much more likely to say they have a great deal of influence on performance standards for students (40 percent versus 18 percent), curriculum (47 percent versus 22 percent), and discipline policy (25 percent versus 13 percent). They were also more likely to have a great deal of control over selection of textbooks and instructional materials (53 percent versus 32 percent) and content, topics, and skills to be taught (60 percent versus 36 percent). Remember, these huge differences in teacher freedom and responsibility were observed before the current presidential administration attempted to nationalize control over schools. Do you think the difference is greater now, or less? School choice would send the federal educrats packing. All schools could have the kind of educational environment reflected in those private school data. Teachers would have a high degree of control over what they taught and how they taught it—and be responsible to parents for the results.
Discipline
Some of the most startling differences between teacher working conditions we found in our study relate to student discipline. As the American legal and regulatory system becomes more detached from common sense, there are ever more constraints on teachers’ ability to keep order in their classrooms. Student rights push out teacher rights, and teachers lose the opportunity to educate because they’re too busy managing chaos. Shockingly, we found public school teachers were four times more likely than private school teachers to say student violence
was a problem on at least a monthly basis (48 percent versus 12 percent). That means about half of public school teachers are being asked to work in an environment where violence is a regular problem. Nearly one in five public school teachers had been physically threatened by a student, compared to only one in 20 private school teachers (18 percent versus 5 percent). Nearly one in 10 public school teachers had been physically attacked by a student, three times the rate in private schools (9 percent versus 3 percent). Where student violence is a problem on some days, student disorder is a problem every day. Sure enough, we found public school teachers were much more likely to report that student misbehavior (37 percent versus 21 percent) or tardiness and class cutting (33 percent versus 17 percent) disrupt their classes. One in eight public school teachers reported that physical conflicts among students occurred every day; only one in 50 private school teachers said the same (12 percent versus 2 percent). How are teachers supposed to teach? We’ve all heard horror stories about parents who won’t let teachers discipline students. But the main reason those parents are a problem is because politicians are in charge of schools. It’s their legal and regulatory system that gives noxious parents so many rights, and teachers so few. The data indicate that where parents are in charge, classroom chaos is controlled. Student rights (and parent rights!) don’t trump teacher rights. That’s because parents have chosen the school—including its discipline policy. If parental expectations and school policy on discipline don’t align, parents can find a better match at another school. That means teachers are free to keep order. School choice would give every teacher that freedom.
Institutional Culture
Each school, like any organization, has its own institutional culture. Where politicians rule, schools are more likely to develop a toxic or indifferent culture. Many of the most important rules and regulations are set outside the school (primarily in negotiations between politicians and staff unions) and leaders have to focus on satisfying external constituencies. Where parents are in charge, the school is free to be itself, and that cultivates a strong spirit. Private school teachers were much more likely to strongly agree that there is a great deal of cooperation between staff members (60 percent versus 41 percent), that their colleagues shared their values and understanding of the core mission of the school (63 percent versus 38 percent), and that their fellow teachers consistently enforced school rules (42 percent versus 29 percent). These intangible factors affect how schools manage their more material affairs. Private schools almost always have smaller budgets than public schools. Yet somehow private school teachers were more likely to strongly agree they had all the textbooks and supplies they needed (67 percent versus 41 percent). They were also more likely to strongly agree they got all the support they needed to teach special needs students (72 percent versus 64 percent). And although their class sizes were only moderately smaller, private school teachers were much
more likely to strongly agree that they were satisfied with their class sizes (61 percent versus 34 percent). Another sign of strong institutional culture is racial tension. A large body of studies finds that private schools are typically less racially segregated than public schools. Yet private school teachers were much more likely to report that student racial tension never happens at their schools (72 percent versus 43 percent). Where politicians are in charge, the school is always an appendage of the government—and that comes through in the institutional culture. School choice would let schools be schools.
Unions
Teacher unions are always eager to remind us of one benefit public school teachers have that private school teachers lack—they’re protected by teacher unions. But how much do these unions benefit teachers, and how much do they benefit themselves? One way to answer that is by looking at what happens when public school teachers aren’t compelled by law to join unions. In state after state, when teachers have been given a choice, they have fled the unions in droves. How beneficial can these unions be if teachers won’t join except at gunpoint? It’s true that salaries are higher in public schools, but teachers do not live by bread alone. We found that private school teachers were actually a little more likely to be satisfied with their salaries (51 percent versus 46 percent). Apparently the freedom to teach is more valuable to some teachers than a few extra dollars. When we look beyond money to overall career satisfaction, the advantage of putting parents in charge is clear. Private school teachers were much more likely to say they would continue teaching as long as they were able (62 percent versus 44 percent), while public school teachers were much more likely to say they’d leave teaching as soon as they were eligible for retirement (33 percent versus 12 percent). Public school teachers were twice as likely to agree that the stress and disappointments they experienced at their schools were so great that teaching there wasn’t really worth it (13 percent versus 6 percent) and almost twice as likely to agree that they sometimes felt it was a waste of time to try to do their best as a teacher (17 percent versus 9 percent). School choice is a political program, but one aimed at getting politicians out of schools. Students and families aren’t the only ones who’d benefit from that. Teachers would be wise to choose choice. Greg Forster (Ph.D., Yale University) is a senior fellow with the Friedman Foundation for Educational Choice. He is the author of six books, including John Locke’s Politics of Moral Consensus (Cambridge University Press, 2005), and the co-editor of three books, including John Rawls and Christian Social Engagement: Justice as Unfairness. He has written numerous articles in peer-reviewed academic journals as well as in popular publications such as The Washington Post and the Chronicle of Higher Education.
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Higher Ed’s Future Rushes In Tuition hikes and horses and buggies vs. innovation and MOOCs
By Patrick B. McGuigan
Tuition at Oklahoma’s 25 public colleges and universities will go up an average of 8.4 percent this year, the Associated Press reports. Hikes for undergraduates will range from Langston’s 3.7 percent boost to about 13 percent at Rose State. The state higher education regents and Chancellor Glen Johnson contend higher tuition was needed after the Legislature trimmed direct support in response to this year’s comparatively tight revenues. Per student, the price increase averages about $417 a year. It fits a national pattern of accelerating tuition and fees. To be clear, even in the “salad days” for budget writers (before 2014), higher education costs for families increased methodically. Despite poor-mouthing from defenders of the status quo, economist Byron Schlomach honors the dedication to education funding demonstrated by taxpayers: “Despite Oklahomans’ relatively low incomes, the state spends handsomely on higher education,” writes Dr. Schlomach, a scholar-in-residence at the Institute for the Study of Free Enterprise at Oklahoma State University. “On average, states devote 8.1 percent of their state and local spending on higher education. Oklahoma devotes 10.4 percent of its spending to higher education. While states spend an average of about 1.6 percent of their GSP on higher education, Oklahoma spends 1.9 percent of its GSP on higher education.” Tuition hikes are framed as a matter of natural law, as inevitable as the rising sun, the August heat, and dry conditions in western Oklahoma. Are they? No. Higher costs in higher education are not as inevitable as the Oklahoma wind. Dr. Steven Agee, dean of Oklahoma City University’s Meinders School of Business, recently announced a 37 percent reduction in
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Former Gov. Frank Keating speaks at a June 29 press conference organized by OCPA.
tuition for master’s degree programs in energy. Shocking, but there it is: Despite no taxpayer subsidy, an institution responsive to market realities. At a recent press conference, Schlomach was joined by Perspective editor Brandon Dutcher and former Oklahoma Gov. Frank Keating. Their conversation felt innovative—yet was drawn from existing models that promote efficiency, productivity, and affordability: As OCPA points out, Oklahoma’s non-instructional college and university workforce “is a startling 61 percent higher than the national average. It is the fourth highest in the country.” Nipping that to the national average would save more than $328 million a year in wages and salaries to finance better instruction. Here’s another idea: “Require professors to teach more.” That’s an idea David Boren used to support. As Dutcher observed, there is a need for pure research, especially in hard
sciences, but it makes sense to have full professors actually teach a full load (say, 12 hours). Schlomach, Keating, and Dutcher cheerfully laid out specifics. Dutcher hopes this effort will “jump-start the conversation” after a disappointing year at the state Capitol. Schlomach outlined the concepts. First, the Regents should create an “Oklahoma Freshman Academy” aiming “to provide Oklahoma residents low-cost general education courses that can be transferred and count towards a degree offered by any Oklahoma public college or university.” This is not pie-in-the-sky stuff. It builds on the Web-based EdX (Harvard/MIT) program, Arizona State University’s Global Freshman Academy, and StraighterLine—systems deemed “massive online open courses” (MOOCs). Second, the state should build a more direct partnership with Western
Governors University (WGU), which Keating helped establish 19 years ago and today has an enrollment greater than the University of Oklahoma and Oklahoma State University combined. In that, we could follow Indiana, Texas, Washington, Tennessee, and Missouri. Such a partnership would not make us outliers, but participants in creativity. As detailed in a recent OCPA memorandum, with costs “as little as $4,000 per year, WGU’s tuition is substantially lower than in-state tuition at Oklahoma’s public regional colleges. Indeed, WGU is so much cheaper that the state could pay a student’s full tuition and still save thousands of dollars annually.” Third, the state should mimic the $10,000 bachelor’s degree program Governor Rick Perry started for the Lone Star State’s public universities in 2011. An OCPA sketch explained, “These new degree programs are mostly built on cooperative agreements with community colleges and scholarships.” The blended idea: Oklahoma could quickly create a $10,000 degree by combining a Freshman Academy with WGU. Legislators could nudge higher education to participate by providing funding for upfront costs. Schlomach says the bottom line is that “in the future our universities are going to be facing more competition.” We must “find ways to make existing resources adequate for the task at hand.” Keating, effusive as ever, is glad to be back home from the nation’s capital
after several years running the American Bankers Association. Concerning higher education, Keating stressed the WGU model as a workable way toward efficiency. Across America, he said in response to questions, with “$1.2 trillion in higher education debt, young people delaying marriage [and] home purchases, couples making fewer investments than in the past—people can’t afford higher education any more. There is something wrong with that picture. There are inefficiencies. You don’t have to bankrupt yourself for a college degree. These ideas would help.” These programs are in their infancy, but they are not unborn. Schlomach says “we are learning how to use technology. Students are taking courses. Flexibility and innovation are the waves of the future.” It’s going to get better, because it must. As he says, many families are past the “price point” they can bear. In a 2013 research paper published by the Heritage Foundation, Oklahoma State University Professor Vance Fried observed, “College in America will look very different in just a few years, thanks to remarkable innovations taking place in technology and business models in higher education. The advance of [online education] will trigger structural changes in what we mean by a ‘college education.’ Students in the future will be more likely to pursue their studies in an ‘unbundled’ system in which different institutions provide different parts of a student’s higher education experience.
Students will be more likely to learn through a blend of online coursework and a residential experience and will likely assemble a guided and rounded transcript of courses and experiences that are independently credentialed, allowing future employers to have a better measure of their skills.” Some students will prefer the traditional on-campus experience, Fried says. The mix of online and on-campus will cost less for all of us. As for players in the existing system, Schlomach observed, “It’s up to Higher Ed to decide their future. The horse and buggy or innovation?” “Higher education needs an integrated approach,” Schlomach said. “I see an increasingly competitive situation.” Fried’s bottom line—the mantra he has repeated for years—is this: “The college of tomorrow will be … a far more effective vehicle for upward mobility for all Americans.” I once thought such optimism was misplaced. As the future rushes in, however, I am more hopeful. Patrick McGuigan (M.A. in history, Oklahoma State University) is the editor of CapitolBeatOK.com and appears weekly as a commentator on NEWS 9, the CBS affiliate in Oklahoma City. He is the editor of seven books on legal policy and the author or co-author of three books, including Ninth Justice: The Fight for Bork. A certified public school teacher, McGuigan is the author of thousands of articles and commentaries on public, private, and home schools.
CHANGING THE CONVERSATION Three Ideas for Lower-Cost, Not Higher-Cost, College
Pro-Growth Tax Cuts Are Bearing Fruit in Kansas By Rex Sinquefield
The Midwestern governor currently occupying the greatest media bandwidth is the one just selected for a spot on the GOP ticket. We can certainly expect to see Indiana Governor Mike Pence’s name all over the news for the next four months, but it’s also worth taking a look at how other Midwestern governors are making a real impact, and at the state level. Now in the third year of his bold tax experiment, Kansas Governor Sam Brownback can see the ways in which reducing (and, in many cases, eliminating) the state income tax is yielding incremental, positive effects for Kansans. Significantly, every year since the tax cuts were implemented, Kansas has surpassed the state record for new business formations. When we consider that startups have decreased nationwide since the Great Recession of 2008, this achievement is particularly remarkable. What’s more, the Kansas unemployment rate stands at 3.7 percent—the lowest the state has seen since 2001, and well below the national average of 5.5 percent. Why the incremental success in Kansas? We certainly can’t attribute these victories to the state’s core industries; due to economic turmoil felt nationwide, Kansas too has seen dips in farm incomes (owing to consistently low crop prices and steep declines in cattle prices), a fall in commodity prices and exports, sluggish movement in oil and natural-gas markets, and declining manufacturing. Without these four industries buoying Kansas’ economy, we must look to other factors: namely, the income tax cut that continues to make a real difference, particularly for small businesses and working families. Governor Brownback put his faith in the private sector, rather than the government, to grow the Kansas economy. By eliminating the income tax for small business, the Brownback administration effectively put money back in families’ pockets and provided promising new businesses with an environment primed for growth. Following the major tax reform in 2013, individual income taxes for individuals, families, and small businesses went down by 30 percent on average. Seventy-one percent of the savings went to individuals and families, who
could then save or spend as they chose. Twenty-nine percent of the savings went to small businesses, allowing them to make larger investments in equipment, space, and staff. Prior to tax reform, Kansas possessed the second-highest individual income tax in the region; today, it is the region’s second-lowest, bested only by Colorado. This is meaningful not just for small businesses and middle- to upper-class families, but also for Kansans of fewer means. Kansas now offers the highest Earned Income Tax Credit in the region. Plus, the Brownback administration increased the standard deduction for “head of household” filings in order to help single-parent households. Importantly, 388,000 of the lowest-income Kansans have been removed from the tax rolls, leaving them with zero tax liability. Equally important from a regional perspective is that fact that Kansas is gaining ground over neighboring Missouri when it comes to gains in net adjusted gross income. In 2013, the same year that the Brownback tax cuts took effect, Kansas experienced a positive reversal in migration of wealth between the two bordering states. Kansas enjoys a nearly $85 million advantage in income gains from Missouri. This is a major reversal. Consider the data between 1995 and 2009, which shows more than $263 million leaving Kansas for Missouri. A longitudinal examination of this trend will bear out whether the flow of money correlates with the institution of Brownback’s tax policy, but the current evidence is certainly compelling. While other state economies struggle under the weight of current economic uncertainties, the incremental successes in Kansas make a solid case for pro-growth reform through income tax cuts.
Every year since the tax cuts were implemented, Kansas has surpassed the state record for new business formations.
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Rex Sinquefield (MBA, University of Chicago) is co-founder of Dimensional Fund Advisors. In 1973, he helped devise the first Standard & Poor’s index funds. He is founder and president of the Show-Me Institute, a free-market think tank in St. Louis. This article first appeared at Forbes.com.
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@OCPAthink 1. After many years of helping new citizens register to vote, on June 24 OCPA’s Estela Hernandez had the privilege of serving as the keynote speaker at a naturalization ceremony. She stressed to the new citizens the importance of civic engagement, standing up for American principles, and defending the Constitution. 2. OCPA distinguished fellow Andrew Spiropoulos is pictured on June 23 at a community symposium in Oklahoma City. His presentation was titled “Team Game: Building an Effective State Legislature.” Spiropoulos is a professor of law at the Oklahoma City University School of Law, which hosted the symposium. (Photo credit: Ann Sherman Photography) 3. OCPA’s Brandon Dutcher (left) and former Oklahoma Gov. Frank Keating are pictured at June 29 press conference presenting ideas on how to reform higher education and provide more affordable education for college students. 4. OCPA’s Trent England discusses American constitutional principles with students at the Four Star Leadership program on July 12. A partnership between the General Tommy Franks Leadership Institute and Museum and Oklahoma Christian University, this summer leadership program is held annually for 70 of the top high-school students in the world.
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QUOTE UNQUOTE “The Boren proposal making our sales tax the most expensive
“Perhaps the hardest-fought battle between Church and [Poland’s] regime
in the country ... for what? Nothing. Nothing. No reform. No
involved family life, for the communists understood that men and women
private school choice. No rigor. No accountability. Nothing. Just
secure in the love of their families were a danger. Housing, work schedules,
add more money, as if more money will solve a problem. More
and school hours were all organized by the state to separate parents from
money doesn’t solve a problem.”
their children as frequently as possible.” Former Gov. Frank Keating
George Weigel
“Econometric analysis I have done suggests that the relationship between state appropriations for
“Deputy Assistant President of the Committee on Community Diversity” A job title randomly generated at UniversityTitleGenerator.com, a website poking fun at administrative bloat in higher education
higher education and economic growth is actually negative–––––resources are taken from competitive private enterprise driven by market discipline and given to an inefficient sector sheltered from such discipline.” Economist Richard Vedder, who helps compile the annual college rankings for Forbes
“We’ve got kids in 11th and 12th grade who can’t read at a third-grade level. How’d they get there?” Eddie Evans, Youth Services of Tulsa’s director of north Tulsa programs